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Survey Report

European life insurers are finding analytics treasures

2020 Life Insurance Predictive Analytics Survey

Insurance Consulting and Technology
Insurer Solutions|

By Matthew Edwards , Alastair Black and Niki Winter | November 24, 2020

How are life insurers using predictive analytics to transform their businesses? Our survey reveals that greater appreciation of the potential benefits and increasing ambitions are often held back by capacity and resource constraints.

Recent years have seen more life insurers adopting the predictive analytics and automation that have already become a competitive necessity for property and casualty (P&C) insurers around the world. Our latest survey shows that demand continues to grow, as life insurers seek new solutions to sharpen business performance and boost customer relations in a highly competitive market with tight margins, slow growth and high operating costs.

Life insurers’ use of predictive analytics, often in tandem with greater automation, is an emerging good news story. 80% of the companies surveyed that are already using predictive analytics said it had provided a positive business impact.

The survey finds, however, that while some life insurers are making progress with their predictive analytics capabilities, most companies still have significant challenges to overcome.

Key findings at a glance



Impact and usage
  • Over 80% of companies that already use predictive analytics report that their use has had a positive impact on the business – none report negative outcomes.
  • Over 30% of companies are already using predictive analytics for individual and group risk business. Similar percentages of companies expect to be doing so within two years.
  • Composite insurers use predictive analytics more, especially in individual and group risk, reflecting the crossover from P&C business.
  • The use of predictive analytics is most common in pricing and mortality analysis.
  • The biggest expansion areas in the next two years are expected to be in disseminating the approach adopted in some more competitive markets to new markets, as well as underwriting, policyholder behaviour to support selling and retention management, and marketing/lead generation.

Drivers and challenges
  • The main drivers for companies investing in predictive analytics are in-force management, improving customer experience and competitive positioning.
  • In one way or another, all the major challenges companies face in implementing predictive analytics involve data. Nearly 60% cite data volume, quality and reliability as a significant challenge. Ranged against that, no companies have any concerns about clarity of strategy related to predictive analytics.
  • Whilst the majority of respondents anticipate no change, a third of multinationals expect the COVID-19 situation to accelerate the use of predictive analytics.

Human and technical factors
  • A substantial minority (30%) of respondents believe their analytics and/or actuarial teams don’t have the capacity to accomplish their predictive analytics goals.
  • Companies mainly look to life actuaries and data scientists with insurance backgrounds to turn their plans in to reality (such as retention analysis that leads to actions whose benefits outweigh any costs, or pricing analysis that can be readily deployed to live pricing), suggesting companies will need to source more of these types of skills and backgrounds.
  • IT bottlenecks are a significant concern to over 30% of respondents.
  • While companies typically use traditional desktop and server environments for analytics, nearly two thirds are either already using the cloud or exploring cloud-based options.

About the survey

Willis Towers Watson’s 2020 Predictive Analytics Survey asked life insurance executives based in Europe for their insights on the future of predictive analytics. The web-based survey covered:

  • The impact of predictive analytics on business results
  • Key applications – today and in the future
  • Types of data being leveraged for predictive analytics
  • Types of technology being used
  • How analytics work is completed
  • New modelling techniques that are gaining momentum

Representatives from 39 insurers, including major multinationals, based in nine countries from across Europe, including the UK, Germany and Ireland participated in the survey.

Authors

Matthew Edwards
Director
Insurance Consulting and Technology

Alastair Black
Director, Insurance Consulting and Technology

Niki Winter
Director, Insurance Consulting and Technology

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2020 Life Insurance Predictive Analytics Survey PDF 1.1 MB

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